Sunday – December 30, 2018

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For several years, perhaps naively, The Foreclosure Hour had been trying to secure an interview with an experienced national or local foreclosure attorney willing to reveal the inside story concerning how mortgage fraud is planned and implemented directly from the highest levels of American Government, through large Mainland law firms, down to the smallest local foreclosure mills.

Finally, we found one such individual a year ago who said he is a regular listener to our show, who vacationing in Hawaii and looking for a home to purchase, planning to retire here, expressed his willingness to talk with us and even to take questions, if respectful, from our listeners so we invited him on our show at the start of this year.

As we prepare for 2019, it seems important to air that show with “Chuck” once again, for among his many frank if sometimes guarded revelations was how our courts are being intentionally deceived by the federal government through Fannie Mae and Freddie Mac, using the legal services of Chuck and his prestigious Big Law colleagues on the Mainland to mislead American Courts.

For obvious reasons our guest preferred to keep his identity hidden, who we agreed only to refer to as “Chuck,” who promised to reveal the underworld secrets that most of us have heretofore only been guessing about.

Please join us this Sunday as we again broadcast Chuck’s description of what many believe is the biggest fraud ever in American history, especially on our courts which as we proceed into 2019 are in most jurisdictions still unwittingly being used as collection agencies for securitized trust crooks.

MARK B. SACKS and BARBARA SACKS, Appellants,
v.
THE BANK OF NEW YORK MELLON FKA THE BANK OF NEW YORK, as Trustee for the Certificate holders of the CWMBS, Inc., Mortgage Pass-Through Trust 2005-HYB7 Mortgage Pass-Through Certificates, Series 2005-HYB7, Appellee.

OR QUESTION OF GREAT PUBLIC IMPORTANCE ON MOTIONS FOR CLARIFICATION, REHEARING, REHEARING EN BANC AND CERTIFICATION OF CONFLICT

FORST, J.

We deny Appellants’ motion for clarification and rehearing en banc and Appellee’s motion for rehearing, rehearing en banc, and certification of conflict or question of great public importance. We nonetheless withdraw our previously issued opinion and substitute the following.

Appellants Mark and Barbara Sacks appeal a final summary judgment of foreclosure in favor of Appellee, The Bank of New York Mellon (“the Bank”). Appellants raise several issues on appeal. We affirm without comment with respect to all issues with one exception. The trial court erred in admitting the payment history submitted by the Bank to establish the amount owed under the note. Accordingly, we reverse the judgment and remand for an evidentiary hearing on that issue. We otherwise affirm on the remaining issues raised.

Background

Appellants defaulted on their mortgage, and the Bank filed a foreclosure complaint and subsequently moved for summary judgment. In support of its motion, the Bank filed a tabulation of Appellants’ payment history under the terms of the note and mortgage and an accompanying affidavit seeking to establish the business records predicate for admission. The affiant was a document coordinator of the Bank’s servicer, Bayview Loan Servicing (“BLS”). The payment history attached to the affidavit was generated by BLS and it incorporated tabulations by Bank of America (“BoA”), a prior servicer of the loan. The entirety of the affidavit’s discussion of BLS’s business records was as follows:

The information in this affidavit is taken from BLS’s business records. I have personal knowledge of BLS’s procedures for creating these records. They are: (a) made at or near the time of the occurrence of the matters recorded by persons with personal knowledge of the information in the business record, or from information transmitted by persons with personal knowledge; (b) kept in the course of BLS’s regularly conducted business activities; and (c) it is the regular practice of BLS to make such records.

At the summary judgment hearing, with respect to the BLS affidavit, Appellants argued the absence of any mention of “[BoA’s] records, how BLS got a hold of them, and how they . . . brought those records in with a sufficient boarding process.” The trial court nonetheless granted the Bank’s motion for summary judgment and entered a final judgment of foreclosure against Appellants.

“All affidavits in support of a motion for summary judgment `shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein.'” Lindsey v. Cadence Bank, N.A., 135 So. 3d 1164, 1167 (Fla. 1st DCA 2014) (quoting Fla. R. Civ. P. 1.510(e)). “The opposing party is not required to file a counter-affidavit to defeat the motion. . . .” Id.

Here, the Bank sought to meet the business records exception to hearsay for its records, including the payment history, via affidavit. The affidavit needed to demonstrate:

(1) that the record was made at or near the time of the event; (2) that it was made by or from information transmitted by a person with knowledge; (3) that it was kept in the ordinary course of a regularly conducted business activity; and (4) that it was a regular practice of that business to make such a record.

Because the servicer’s (BLS) records incorporated a payment history generated by a predecessor servicer (BoA), the additional requirements of demonstrating reliance and trustworthiness attached. This Court’s opinion in Calloway explains:

Where a business takes custody of another business’s records and integrates them within its own records, the acquired records are treated as having been “made” by the successor business, such that both records constitute the successor business’s singular “business record.” United States v. Adefehinti, 510 F.3d 319, 326 (D.C. Cir. 2007), as amended (Feb. 13, 2008). However, since records crafted by a separate business lack the hallmarks of reliability inherent in a business’s self-generated records, proponents must demonstrate not only that “the other requirements of [the business records exception rule] are met” but also that the successor business relies upon those records and “the circumstances indicate the records are trustworthy.” United States v. Childs, 5 F.3d 1328, 1333 (9th Cir. 1993).

. . . .

This principle is codified within section 90.803(6) itself, which provides trial courts the ability to exclude documents otherwise fitting the business records exception where “the sources of information or other circumstances show lack of trustworthiness.” § 90.803(6)(a), Fla. Stat. (2008).

157 So. 3d at 1071 (alteration in original) (emphasis added) (footnote omitted). Trustworthiness can be established by either (1) “providing evidence of a business relationship or contractual obligation between the parties that ensures a substantial incentive for accuracy,” or (2) “the successor business itself may establish trustworthiness by independently confirming the accuracy of the third-party’s business records upon receipt.” Id. at 1072.

In Calloway, we found the bank’s witness confirmed the trustworthiness of the relied-upon third-party business records by testifying that the bank reviewed the payment history for accuracy before inputting the payment information into its own system. Id. We additionally noted that, “even had [the witness] not so testified, the circumstances of the loan transfer itself would have been sufficient to establish trustworthiness given the business relationships and common practices inherent among lending institutions acquiring and selling loans.” Id.

Somewhat similarly, in Nationstar Mortg., LLC v. Berdecia, 169 So. 3d 209 (Fla. 5th DCA 2015), the court found a witness’s entry of records created by a prior servicer proper “so long as all the requirements of the business records exception are satisfied, the witness can testify that the successor business relies upon those records, and the circumstances indicate the records are trustworthy.” Id. at 216; see also Le v. U.S. Bank, 165 So. 3d 776, 778 (Fla. 5th DCA 2015) (holding that a witness properly laid the foundation for a prior servicer’s records because the witness “testified that she was familiar with industry standards in recording and maintaining the records and that the records received from the prior servicer were tested for accuracy and compliance with industry standards via a boarding process before the information was input”).

Here, the relevant portion of the Bank representative’s affidavit merely recited the four elements of the business records exception, as applied to BLS’s own records. Just as in Hidden Ridge Condominium, the affidavit said nothing about incorporating the predecessor servicer’s payment records or, indeed, anything about the predecessor at all. Without any explanation as to how BoA’s payment records were verified for accuracy or how the Bank acquired them, the trustworthiness requirement was not met. Thus, we must conclude “[t]he record fails to demonstrate that an adequate foundational predicate was established, and the loan . . . records relied on to establish the outstanding debt constituted inadmissible hearsay.” Channell, 173 So. 3d at 1020 (citing §§ 90.802, 90.803(6), Fla. Stat. (2014)). Without the payment history, there was insufficient evidence to support the amount owed under the loan, and summary judgment was granted in error on this point.

In their brief, Appellants also challenged the trial court’s rulings that the Bank had standing, that their affirmative defenses had been refuted, and that there was sufficient evidence BLS was the servicer of the loan. As to these issues, we conclude that no error occurred. Thus, these rulings are conclusively established for the purpose of further proceedings.

Conclusion

The Bank failed to establish a foundation for entry of its business records concerning the amount due and owing. Thus, “there is insufficient evidence to support the amount due and owing under the loan,” and “we must reverse and remand for further proceedings to properly establish the amount due and owing.” Channell, 173 So. 3d at 1020.

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Sunday – December 23, 2018

Myths and Realties That Every Homeowner Needs To Know About Truth-In-Lending Act (TILA) Rescissions As A Defense To Foreclosure

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Despite the importance of TILA rescissions in a borrower’s arsenal of defenses against foreclosure, no area of foreclosure defense is least understood or the subject of more uninformed debate.

For decades commentators and judges alike have too frequently demonstrated a continual misunderstanding of TILA rescissions, which has generated constant confusion not only among foreclosure defense attorneys, but also in an overwhelming number of unhelpful state and federal judicial decisions.

Born out of laudable Congressional concern half a century ago to protect mortgage borrowers, TILA is a classic example of a good idea poorly implemented.

Even worse, disagreements over the application of TILA disclosure rules and remedies have taken attention and availability away from numerous otherwise effective common law foreclosure defenses such as adhesion, unconscionability, estoppel, fraud, and unfair and deceptive business acts and practices.

On today’s show we will attempt to bring some clarity to this confused area of the law that promises, yet too often rarely provides homeowner relief against predatory lending, and John and I will chart future trends, attempting to separate TILA rescission myths from realities, answering, time permitting, the following questions:

1. How does a borrower exercise the right to cancel?

2. How long does a borrower have the right to cancel?

3. Which borrowers have the right to cancel and which do not?

4. Can the right to cancel be extended beyond three years?

5. Who must sign the cancellation letter?

6. What happens if the lender does not respond to the cancellation letter within 20 days of receipt?

7. Who must be served with the notice of cancellation?

8. Is an assignee of your original lender nevertheless bound by a TILA rescission?

9. Can you rescind a refinancing loan?

10. How must a cancellation notice be communicated?

11. Can a loan be rescinded following the death of a borrower?

12. Must all borrowers cancel a loan before being able to exercise the right to rescind?

13. Can a TILA rescission right be waived in a settlement agreement with a lender?

14. How is the start date of the right to cancel determined as based on loan “consummation”?

15. How does a borrower subsequently prove lack of delivery of two notices of the right to cancel at loan consummation?

16. What is the effect of a borrower signing an acknowledgement at an escrow closing of having received two notices of the right to cancel?

17. Can a loan modification agreement be rescinded?

18. What is the difference between a statute of limitations and a statute of repose in relation to a TILA rescission?

19. How can a borrower prove not having received two copies of the notice of the right to cancel at closing and during the extended three year rescission period?

20. If the extended right to cancel is terminated by a “sale,” what is the operative definition of a “sale.”

21. How long after a timely TILA cancellation does a borrower have in which to sue?

22. When must a borrower, canceling a loan, tender the reduced TILA rescission payoff amount?

23. How is the reduced TILA rescission payoff amount determined?

24. If a TILA rescission foreclosure case is settled without reference to an award of attorneys fees and costs, can a borrower recover attorneys fees and costs nevertheless?

25. How does the state “recoupment” exception to the federal TILA rules affect TILA rescission rights?

26. How does a bankruptcy case affect TILA rescission rights?

27. Can you rescind a loan pursuant to TILA rescission rights and still receive an award of damages?

28. Does a TILA rescission lawsuit have to be brought in federal court?

29. When can a TILA rescission be enforced even if a loan is not for consumer purposes, but is for business purposes or is for new construction?

30. What is the practical difference between interpreting a Congressional statute such as TILA and interpreting a constitutional provision?

We will also suggest, time permitting, some possible changes in TILA legislation that would better serve the purposes of the Act and homeowners.

Please join us this Sunday on The Foreclosure Hour in order to better understanding all of these rescission issues, to advance your understanding regarding the use of TILA rescissions as a defense against foreclosure, which knowledge might just save your home from foreclosure and you and your family from eviction.

Wells Fargo & CompanyWFC has finally attained the customary final court approval for settlement of the fake accounts scandal related to class action lawsuit that was filed against the company by its shareholders in September 2016.

The settlement amount of $480 million was approved by both the parties in May 2018. Also, shareholders who bought Wells Fargo’s common stock in the period between Feb 26, 2014 and Sep 20, 2016 will be eligible to claim the refund. Notably, the San Francisco-based bank had fully reserved the amount, as of Mar 31, 2018.

A Brief Background

The class action lawsuit relates to the revelation of a sales scam, wherein the bank’s employees allegedly opened millions of unauthorized accounts illegally, in order to meet aggressive internal sales goals.

OPINION

JUSTICE GARMAN delivered the judgment of the court, with opinion.

¶ 1 In Illinois, a plaintiff who voluntarily dismisses a claim has only one opportunity to refile that same claim. Whether two lawsuits assert the same claim does not depend solely on how the plaintiff titles the complaint, however. This issue sometimes requires a judicial determination.

¶ 2 In this case, plaintiff First Midwest Bank (First Midwest) sued defendants Andres Cobo and Amy M. Rule for breach of a promissory note. Cobo and Rule responded that First Midwest or its predecessor had already sued them twice for the same breach of the same promissory note: once in a foreclosure suit in 2011 and once in a breach of promissory note suit in 2013. First Midwest claimed that the first lawsuit involved a claim for foreclosure on a mortgage, which is different from a breach of a promissory note.

¶ 3 The circuit court of Cook County agreed with First Midwest Bank, but the appellate court reversed. 2017 IL App (1st) 170872. We granted First Midwest’s petition for leave to appeal (Ill. S. Ct. R. 315 (eff. Nov. 1, 2017)), and we affirm the appellate court’s decision. We hold that a lawsuit for breach of a promissory note asserts the same cause of action as a prior foreclosure complaint when that foreclosure complaint specifically requested a deficiency judgment based on the same default of the same note.

¶ 4 BACKGROUND

¶ 5 On November 20, 2006, Andres Cobo and Amy M. Rule, the defendants, took out a mortgage on their property located at 625 S. 12th Avenue, Maywood, Illinois, with Waukegan Savings and Loan, SB (Waukegan). This mortgage secured a loan from Waukegan for $227,500.

¶ 6 Five years later, Cobo and Rule defaulted on their loan. Waukegan commenced foreclosure proceedings on December 8, 2011, alleging that defendants had ceased making payments on July 1, 2011. In compensation for the remaining $214,079.06, plus interest, collection costs, and late fees, Waukegan sought a foreclosure and sale of 625 S. 12th Avenue and a deficiency judgment for the remaining debt against defendants. The complaint named Cobo and Rule as “persons claimed to be personally liable for deficiency.” The complaint’s requested relief included a “Judgment of foreclosure and sale” and “personal judgment for deficiency, if sought.”

¶ 7 First Midwest acquired Waukegan’s interest in the note and mortgage, and on April 2, 2013, First Midwest voluntarily dismissed the foreclosure suit. It filed a new lawsuit against Cobo and Rule on April 16, 2013, for breach of a promissory note. First Midwest alleged that Cobo and Rule had defaulted on their loan on July 1, 2011, and sought $251,165.72, which included the $214,079.06 remaining on the principal plus interest, late fees, and other costs.

¶ 8 After another two years the case had not yet proceeded to trial. First Midwest moved to continue the trial date, but on April 3, 2015, the circuit court denied that motion. That same day, First Midwest voluntarily dismissed its suit.

¶ 9 Finally on July 30, 2015, First Midwest initiated the lawsuit that provides the basis for this appeal. First Midwest sued Cobo and Rule for breach of a promissory note and unjust enrichment, seeking $278,838.13, which included the $214,079.06 principal plus interest, late fees, and other costs.

¶ 10 Cobo and Rule moved to dismiss under section 2-619 of the Code of Civil Procedure (Code). 735 ILCS 5/2-619 (West 2016). Citing LSREF2 Nova Investments III, LLC v. Coleman, 2015 IL App (1st) 140184, they argued that Illinois’s “single refiling rule,” which prohibits a plaintiff from refiling the same cause of action more than once, barred First Midwest’s claim. Because First Midwest or its predecessor in interest had already filed two lawsuits based on the same mortgage, note, and default, Cobo and Rule asked the court to dismiss the suit.

¶ 11 The circuit court denied the motion to dismiss. Relying on LP XXVI, LLC v. Goldstein, 349 Ill. App. 3d 237 (2004), the court found that a lawsuit based on a mortgage and a lawsuit based on a promissory note are not the same cause of action. It concluded that the pending lawsuit was the first refiling of the breach of a promissory note action and both of those suits were distinct from the foreclosure suit. The court distinguished Coleman because in that case the first lawsuit had reached a final adjudication on the merits but the foreclosure complaint in this case was voluntarily dismissed.

¶ 12 Later First Midwest moved for summary judgment. Cobo and Rule reasserted their single refiling rule argument as an affirmative defense. First Midwest moved to strike defendants’ affirmative defenses. The circuit court granted First Midwest’s motion to strike the affirmative defenses and granted summary judgment, awarding First Midwest $308,192.56.

¶ 13 The appellate court vacated the circuit court’s order and dismissed the complaint. 2017 IL App (1st) 170872. It acknowledged that a mortgage and note are distinct contracts, but it found that First Midwest’s suit for breach of promissory note and its foreclosure suit arose from the same set of operative facts and thus constitute the same cause of action for the purposes of the single refiling rule. Id. ¶ 19. Agreeing with Coleman, 2015 IL App (1st) 140184, the court concluded that a foreclosure complaint that seeks a deficiency judgment arises out of both the mortgage and the note. 2017 IL App (1st) 170872, ¶ 22. In response to the circuit court’s observation that Coleman involved a prior suit that reached a final adjudication on the merits, the appellate court found that final adjudication was a component of res judicata, not the single refiling rule. Because First Midwest or its predecessor sued based on the same default of the same note in 2011, 2013, and 2015, the court held that this suit for breach of promissory note was an impermissible second refiling.

¶ 15 ANALYSIS

¶ 16 The circuit court’s order under review is a grant of summary judgment in favor of First Midwest. We review a summary judgment order de novo. Schultz v. Illinois Farmers Insurance Co., 237 Ill. 2d 391, 399-400 (2010). A court should award summary judgment only if there is no question of material fact and the moving party is entitled to judgment as a matter of law. 735 ILCS 5/2-1005(c) (West 2012). Rule and Cobo raised the same argument in both a section 2-619 motion and as an affirmative defense on summary judgment. We review a motion to dismiss under section 2-619 de novo. Moon v. Rhode, 2016 IL 119572, ¶ 15.

¶ 17 Defendants Cobo and Rule argue that the court should dismiss First Midwest’s complaint based on the single refiling rule. This rule derives from section 13-217 of Code, which states that, in applicable actions, if

“the action is voluntarily dismissed by the plaintiff, or the action is dismissed for want of prosecution, *** the plaintiff, his or her heirs, executors or administrators may commence a new action within one year or within the remaining period of limitation, whichever is greater, after *** the action is voluntarily dismissed by the plaintiff.” 735 ILCS 5/13-217 (West 1994).

¶ 19 This test, which we adopted in River Park, Inc. v. City of Highland Park, 184 Ill. 2d 290, 311 (1998), treats separate claims as the same cause of action “if they arise from a single group of operative facts.” Courts should approach this inquiry “`pragmatically, giving weight to such considerations as whether the facts are related in time, space, origin, or motivation, whether they form a convenient trial unit, and whether their treatment as a unit conforms to the parties’ expectations or business understanding or usage.'” Id. at 312 (quoting Restatement (Second) of Judgments § 24, at 196 (1982)).

¶ 20 We agree with Cobo and Rule that First Midwest’s two later suits for breach of a promissory note asserted the same cause of action as First Midwest’s predecessor’s first suit under the mortgage and the note. Both breach of promissory note complaints alleged the same default date, July 1, 2011, as the foreclosure complaint. All three complaints alleged that Cobo and Rule were personally liable for the same $214,079.06 principal. Most importantly, in the foreclosure complaint from 2011, First Midwest’s predecessor expressly sought a deficiency judgment under the note. Although that complaint had only one count, for “FORECLOSURE,” it requested as a remedy “a personal judgment for deficiency, if sought.” For practical purposes, the request for a deficiency judgment asserted a second claim, this one under the note. First Midwest later sought a remedy under that same note, alleging the exact same default date, in 2013 and again in 2015. The 2015 suit was an impermissible third filing.

¶ 22 First Midwest further objects that all of the facts that the foreclosure complaint shared with the breach of promissory note complaints are included in the form foreclosure complaint that the Illinois Mortgage Foreclosure Law (Foreclosure Law) (735 5/15-1101 et seq. (West 2016)) provides. Section 15-1504(a) of the Foreclosure Law provides plaintiffs with a sample foreclosure complaint and instructs plaintiffs how to complete the form. This sample complaint instructs the plaintiffs to attach copies of both the mortgage and the note to the foreclosure complaint, to disclose the names of the defendants alleged to be personally liable for any deficiency, and to specify the total amount due. Id. § 15-1504(a). According to First Midwest, using these facts against a plaintiff in the transactional test would be unfair when the Foreclosure Law requires a plaintiff to plead these facts.

¶ 23 This objection is not compelling because no section of the Foreclosure Law requires a plaintiff to seek a deficiency judgment during the foreclosure proceedings. Section 15-1504(b) clearly states that the “foreclosure complaint need contain only such statements and requests called for by the form set forth in subsection (a) of Section 15-1504 as may be appropriate for the relief sought.” Id.§ 15-1504(b). Section 15-1504(a) allows a plaintiff in a foreclosure proceeding to request a “personal judgment for a deficiency, if sought.” (Emphasis added.) Id. § 15-1504(a). Regarding deficiency judgments, section 15-1504(f) states that “the plaintiff may have a personal judgment against any party in the foreclosure indicated as being personally liable therefor and the enforcement thereof be had as provided by law.” (Emphasis added.) Id. § 15-1504(f). This language indicates that, although a plaintiff has the option to seek a deficiency judgment in foreclosure proceedings, it need not.

¶ 24 That the exact language in First Midwest’s predecessor’s foreclosure complaint was “a personal judgment for deficiency, if sought” does not change our analysis. The phrase “if sought” likely results from the complainant closely replicating section 15-1504(a) of the Foreclosure Law. That section provides a sample foreclosure complaint form and instructions on how plaintiffs should complete the form. Section 15-1504(a) begins:

“A foreclosure complaint may be in substantially the following form:

(1) Plaintiff files this complaint to foreclose the mortgage (or other conveyance in the nature of a mortgage) (hereinafter called `mortgage’) hereinafter described and joins the following person as defendants: (here insert names of all defendants).” Id. § 15-1504(a)(1).

Section 1504(a) ends by providing a sample request for relief.

“REQUEST FOR RELIEF

Plaintiff requests:

(i) A judgment of foreclosure and sale.

(ii) An order granting a shortened redemption period, if sought.

(iii) A personal judgment for a deficiency, if sought.

(iv) An order granting possession, if sought.

(v) An order placing the mortgagee in possession or appointing a receiver, if sought.

(vi) A judgment for attorneys’ fees, costs and expenses, if sought.” Id.§ 15-1504(a).

First Midwest’s predecessor’s foreclosure complaint from 2011 was nearly an exact reproduction of this request for relief. Rather than tailor the specific relief requested to the individual case by eliminating the instruction “if sought,” First Midwest’s predecessor likely transferred this language directly into its complaint. In such circumstances, we decline to find that the complaint did not seek a deficiency judgment.

¶ 25 Alternatively, First Midwest suggests that the phrase “if sought” allows a complainant to reserve that remedy. Purportedly this phrase allows a plaintiff to delay deciding whether to pursue a deficiency judgment until after the foreclosure sale. Without approving of this interpretation, we find that this interpretation would not change our conclusion. If First Midwest’s predecessor sought to reserve the possibility that it would recover a personal judgment under the note, then it still invoked that note in the foreclosure complaint and threatened to seek a remedy based on the note. Cobo and Rule became alerted to the possibility that they would need to defend against a claim under the note. First Midwest cannot avoid the single refiling rule by claiming that the first complaint only raised the possibility that it might seek recovery under the note.

¶ 26 Our approach best reconciles the cases on which the parties rely. In Coleman, the lender initiated foreclosure proceedings, seeking both to foreclose on the mortgage and to secure a personal judgment against the borrowers for the deficiency. 2015 IL App (1st) 140184. The court foreclosed on the subject property and entered an in rem deficiency judgment. Later the plaintiff sued under the promissory note, but res judicata barred this suit. The plaintiff had argued that the two claims relied on two separate transactions; the first relied on the mortgage, and the second relied on the note. Id. ¶ 9. The appellate court found that the lender in the earlier case relied on both the mortgage and the promissory note because it sought a deficiency judgment in addition to foreclosure. The court concluded that both cases arose from the note, so they arose from the same set of operative facts and res judicata barred the second suit. Id. ¶ 14. Our analysis closely tracks the Coleman court’s reasoning and that of the appellate court here (2017 IL App (1st) 170872, ¶ 22).

¶ 27 The circuit court here distinguished this case from Coleman because the first lawsuit in Coleman reached a final adjudication on the merits. The lender had foreclosed on the borrower’s property and actually secured a deficiency judgment before the plaintiff filed another lawsuit to collect under the promissory note. Coleman, 2015 IL App (1st) 140184, ¶ 5. In this case, however, neither the foreclosure suit commenced in 2011 nor the suit for breach of promissory note commenced in 2013 reached a final adjudication on the merits. Instead the plaintiff voluntarily dismissed both cases. The circuit court here found that a final adjudication on the merits is a necessary component of res judicata, so it rejected defendant’s reliance on Coleman.

¶ 28 The single refiling rule does not require that the prior lawsuit have reached a final adjudication on the merits. The single refiling rule applies to a variety of circumstances, including when “the action is voluntarily dismissed by the plaintiff, or the action is dismissed for want of prosecution, or the action is dismissed by a United States District Court for lack of jurisdiction, or the action is dismissed by a United States District Court for improper venue.” 735 ILCS 5/13-217 (West 1994). In all of these circumstances the earlier litigation necessarily would not have reached a final adjudication on the merits. The single refiling rule is not simply another name for res judicata. Instead this rule results from our interpretation of section 13-217. Flesner, 145 Ill. 2d at 254. These are two separate doctrines, but the appellate court has applied the res judicata test for “identity of the cause of action” in the context of the single refiling rule because it is a convenient test with an established body of case law for determining when two causes of action are the same.

¶ 30 In Goldstein, the defendant and the plaintiff’s predecessor executed a mortgage, a promissory note, and a commercial guaranty. 349 Ill. App. 3d at 238. After the defendant defaulted, the plaintiff’s predecessor foreclosed on the mortgage and secured a deficiency judgment. After acquiring the predecessor’s interest, the plaintiff sued under the guaranty. Id. at 239. The appellate court found that res judicata did not bar the plaintiff’s suit because the mortgage, note, and guaranty were all separate transactions. Id. at 241.

¶ 31 The appeal in Goldstein resulted from a guaranty specifically waiving any “one action” or “anti-deficiency” defense and any “`other law which may prevent [plaintiff] from bringing any action, including a claim for deficiency, against [defendant], before or after [plaintiff’s] commencement or completion of any foreclosure action.'” Id. at 238. Thus, Goldstein is distinguishable because it arose from the defendant’s guaranty that specifically waived the sort of argument that Cobo and Rule raise here.

¶ 32 Moreover, Goldstein did not address a situation in which the lender sought a remedy under the same instrument in three separate suits. The first complaint in Goldstein did not seek a remedy under the guaranty. The court explicitly found that “defendant’s rights under the guaranty were not placed in issue or adjudicated” in the prior litigation. Id. at 241. Unlike in Goldstein, in this case the litigants’ rights under the note were at issue in all three proceedings.

¶ 33 In Turczak the defendant bank had already secured a default judgment against the plaintiffs for breaching a promissory note that accompanied a mortgage. When the plaintiffs later sought to sell their property to satisfy their debts to both the defendant and a second lender, the defendant bank claimed that its consent was required because it still had an enforceable mortgage on that property. Turczak, 2013 IL App (1st) 121964, ¶¶ 7-8. The defendant bank demanded that the plaintiffs pay $6000 before it would consent to the sale. Id. ¶ 8. Later, the plaintiffs alleged that the defendant bank’s mortgage was not enforceable because the default judgment based on the promissory note created a res judicata bar to any attempt to enforce the mortgage. The plaintiffs sued the defendant bank, claiming that it violated the Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1 et seq. (West 2008)) by pretending to have an enforceable mortgage when it did not. Turczak, 2013 IL App (1st) 121964, ¶ 10.

¶ 34 The appellate court rejected the plaintiffs’ argument. It found that the defendant bank’s mortgage had remained enforceable despite the prior default judgment. Id. ¶¶ 27-29. The court explained that a lender may sue under the mortgage and the note consecutively or concurrently. Id. ¶ 31. Because the defendant had sought only a default judgment in its earlier lawsuit, no prior action adjudicated the parties’ rights under the mortgage, and that mortgage remained enforceable. Id. ¶ 36.

¶ 35 First Midwest’s reliance on Turczak is misplaced. The key component that was missing in Turczak—a prior lawsuit seeking to adjudicate the parties’ rights under the disputed instrument—is present in this case. In Turczak the defendant bank had sought only a default judgment in the earlier litigation. Id. ¶¶ 27-29. It did not seek to foreclose on the mortgage, so the mortgage remained enforceable. Here First Midwest’s predecessor sought remedies under both the mortgage and the note.

¶ 37 We need not overturn Farmer City to rule in Cobo and Rule’s favor. Consistent with Farmer City, we find that lenders may pursue a claim under the mortgage and note either consecutively or concurrently.[1] First Midwest’s predecessor sought relief under the mortgage and note concurrently, and we do not hold that any part of the complaint was inappropriate at the time it was filed. Conversely, if First Midwest’s predecessor had sought a remedy only under the note, it could seek a remedy under the mortgage later. Turczak, 2013 IL App (1st) 121964, ¶¶ 27-29. However, a lender may not assert a claim under the mortgage and the note concurrently by seeking a foreclosure and a deficiency judgment and then assert a claim under the note consecutively twice more.

¶ 38 First Midwest warns that this approach will have harmful consequences. Many notes or mortgages incorporate or reference a variety of other legal instruments. Sometimes a note is secured through multiple mortgages. Often a third party acts as a guarantor. The lender and the borrower frequently enter into loan modification agreements. First Midwest warns that if we rule against it, the court will limit the available remedies and require lenders to file one suit under all possible instruments.

¶ 39 By focusing on the remedy sought we avoid the consequences that First Midwest raises. First Midwest is correct that foreclosure complaints often share many facts with other lawsuits that a lender might bring. These shared facts, however, are not necessarily “operative facts” under the transactional test. River Park, Inc., 184 Ill. 2d at 311. A plaintiff seeking to foreclose on a mortgage puts the note at issue and makes those facts “operative” only if the plaintiff also seeks to adjudicate the parties’ rights under the note. Moreover, the Foreclosure Law explicitly states that “foreclosure of a mortgage does not affect a mortgagee’s rights, if any, to obtain a personal judgment against any person for a deficiency.” 735 ILCS 5/15-1511 (West 2016). Nothing in this opinion contradicts that statutory provision.[2] Because we do not hold that the mortgage and note constitute the same transaction, we do not hold that claims under those instruments must be litigated at the same time for the purposes of the single refiling rule.[3] See Turczak, 2013 IL App (1st) 121964, ¶¶ 27-29.

¶ 40 This reasoning also applies to other instruments besides the note and the mortgage, such as a guaranty or a loan modification agreement. Illinois courts have consistently found that a plaintiff may not recover from a guarantor without pleading separately. United Central Bank v. Patel, 2015 IL App (3d) 140863-U, ¶ 18; First Midwest Bank v. IRED Elmhurst, LLC, 2014 IL App (2d) 140456-U, ¶ 16; Hickey v. Union National Bank & Trust Co. of Joliet, 190 Ill. App. 3d 186, 190 (1989). Unless the plaintiff alleges a violation of the guaranty in its initial complaint, a foreclosure suit based on a mortgage does not necessarily adjudicate any third party’s rights. It does not even adjudicate the rights of the parties to the note unless the plaintiff specifically asks for that remedy, as First Midwest’s predecessor did here. Similarly, if a plaintiff dismisses its foreclosure complaint because it has entered into a loan modification agreement with the defendant, the single refiling rule does not prevent that plaintiff from filing a new complaint based on that loan modification agreement. The second lawsuit is not simply a refiling of the first, because it relies on a distinct transaction and new operative facts. See Norris,2017 IL App (3d) 150764, ¶ 22.

¶ 41 CONCLUSION

¶ 42 First Midwest’s suit for breach of a promissory note constituted the third attempt to collect from the same defendants based on the same July 1, 2011, default of the same promissory note. The single refiling rule barred this claim. The appellate court’s opinion is affirmed, the circuit court’s summary judgment order is vacated, and the case is dismissed.

¶ 43 Appellate court judgment affirmed.

¶ 44 Circuit court judgment vacated.

[1] For a helpful discussion of the historical difference between the deficiency judgment as a form of legal relief and the foreclosure as a form of equitable relief, see Elizabeth Martin, Note, Getting a Second Bite at the Apple: The Res Judicata Exception for Seeking Foreclosure Deficiencies in Illinois,2016 U. Ill. L. Rev. 2271, 2275-80 (2016).

[2] In United Central Bank v. KMWC 845, LLC, 800 F.3d 307 (7th Cir. 2015), the Seventh Circuit referenced an old Illinois rule prohibiting a lender from suing under the mortgage when a statute of limitations or other procedural rule barred a suit under the note. Without approving of the Seventh Circuit’s analysis in that case, we note that any such rule would be in addition to the single refiling rule and would not affect the analysis here.

[3] In further response to First Midwest’s prediction, we observe that it is not clear whether requiring lenders to bring all their potential claims against a borrower in one suit would be inadvisable. For example, California’s “one action rule” states that “[t]here can be but one form of action for the recovery of any debt or the enforcement of any right secured by mortgage upon real property or an estate for years therein.” Cal. Civ. Proc. Code § 726 (West 2016); Security Pacific National Bank v. Wozab, 800 P.2d 557 (Cal. 1990). This is exactly the policy that First Midwest opposes. We neither adopt this policy nor take any position on it, as Illinois law continues to allow lenders to sue under the mortgage, note, or other instrument separately.

Two benchmark U.S. stock indexes are careening toward a historically bad December.

Both the Dow Jones Industrial Average and the S&P 500 are on pace for their worst December performance since 1931, when stocks were battered during the Great Depression. The Dow and S&P 500 are down 7.8 percent and 7.6 percent this month, respectively.

December is typically a very positive month for markets. The Dow has only fallen during 25 Decembers going back to 1931.

The S&P 500 averages a 1.6 percent gain for December, making it typically the best month for the market, according to the Stock Trader’s Almanac.

Charmaine J. Comprosky of The Law Office of Charmaine J. Comprosky, PA, Pompano Beach, for appellant.

Christian J. Gendreau of Storey Law Group, PA, Orlando, for appellee.

KLINGENSMITH, J.

2010-3 SFR Venture, LLC (“Venture”) sought to foreclose on a mortgage entered into by Karla Rodriguez (“Borrower”). After a voluntary dismissal by a substituted plaintiff, Borrower filed a motion for prevailing party attorney’s fees. Her motion was denied due to the fact that she challenged Venture’s standing throughout the lawsuit. Borrower claims that the trial court erred in denying her motion for attorney’s fees because the issue of standing was never resolved by the court on the merits. We agree.

In response to Venture’s foreclosure complaint, Borrower asserted several affirmative defenses, including lack of standing. Venture later moved to substitute Wilmington Savings Fund (“WSF”) as the plaintiff. After the trial court granted substitution, WSF filed a notice of voluntary dismissal. In response, Borrower moved for, and was granted, entitlement to prevailing party attorney’s fees and costs pursuant to the loan documents and section 57.105(7), Florida Statutes (2008).

WSF moved for reconsideration. At the hearing on the motion, WSF argued Borrower was precluded from recovering attorney’s fees and costs based on the note and mortgage[1] after taking the position that Venture— the previous plaintiff—lacked standing to sue under the same note and mortgage. The trial court entered an order granting WSF’s motion for reconsideration, struck the previous order granting Borrower’s entitlement to attorney’s fees and costs, and entered an order denying Borrower’s motion. This appeal followed.

On appeal, Borrower claims that despite raising the affirmative defense and arguing that Venture and WSF lacked standing below, both she and WSF were equally entitled to enforce the note and mortgage. Borrower alleges that she became the prevailing party for purposes of an award of prevailing party fees under section 57.105(7) when WSF voluntarily dismissed the action.

In opposition, WSF relies on Nationstar Mortg. LLC v. Glass, 219 So. 3d 896, 899 (Fla. 4th DCA 2017),review granted, Glass v. Nationstar Mortg., LLC, 2018 WL 2069328 (Fla. Feb. 13, 2018), which held, “A party that prevails on its argument that dismissal is required because the plaintiff lacked standing to sue upon the contract cannot recover fees based upon a provision in that same contract.”

“In general, when a plaintiff voluntarily dismisses an action, the defendant is the prevailing party.” Thornber v. City of Walton Beach, 568 So. 2d 914, 919 (Fla. 1990). “However, there is a difference between prevailing on the merits on a standing issue and an undifferentiated voluntary dismissal of a lawsuit prior to any merits determination.” Wells Fargo Bank, N.A. v. Elkind, 2018 WL 4212149 at *1 (Fla. 4th DCA, Sept. 5, 2018).

WSF contends that the trial court resolved—on the merits—the issue of standing after Borrower filed requests for admissions seeking that Venture admit or otherwise respond to two requests related to standing. Venture failed to timely respond to the request for admissions; thus, they were deemed technically admitted. See Fla. R. Civ. P. 1.370(a). Such admissions are “conclusively established unless the court on motion permits withdrawal or amendment of the admission.” Fla. R. Civ. P. 1.370(b); see Poag v. Nationstar Mortg., LLC, 198 So. 3d 1002, 1004 (Fla. 1st DCA 2018). Here, the court denied Venture’s request to withdraw the technical admissions; as such, those matters were conclusively established as facts. See id.

WSF’s voluntary dismissal rendered Glass inapplicable because the parties never litigated the merits of Venture’s or WSF’s standing below, and the trial court never made a finding that the Borrower was not a party to the note or mortgage. See Elkind, 2018 WL 4212149 at *1. The trial court also never made an explicit finding as to which of the issues raised by Borrower’s affirmative defenses or requests for admissions were dispositive. Until the trial court resolves a given issue on the merits, litigants are permitted to take alternative, even conflicting, positions on disputed issues. See Fla. R. Civ. P. 1.110(g). Consequently, the fact that certain unanswered admissions became established facts in the underlying suit does not equate to a legal determination regarding Venture’s standing to bring this foreclosure action or WSF’s ability to maintain it. See Voorhees, 194 So. 3d at 451. Because WSF voluntarily dismissed the action, Borrower did not prevail on the merits in her argument that the lender lacked standing to sue on the contract. See Elkind, 2018 WL 4212149 at *1.

Therefore, Borrower is not precluded from recovering fees based on a provision in the contract and section 57.105(7). Cf. Glass, 219 So. 3d at 899. Accordingly, we reverse the order denying Borrower’s motion for attorney’s fees, remand for the trial court to grant the award of attorney’s fees to Borrower, and order the trial court to determine the reasonableness of the amounts sought. As we did in Elkind, we decline to address the issue of whether Borrower’s victory on the attorney’s fees issue here means she is collaterally estopped from raising standing in a future foreclosure brought on the same mortgage and note.

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Sunday – December 16, 2018

Eleven New Developments in Foreclosure Defense Expected in 2019 That Every Homeowner Facing Foreclosure Needs To Anticipate and Take Advantage of Now.

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Despite numerous significant advances in foreclosure defense in 2018 discussed this year on our show, especially the evidentiary requirement that foreclosing plaintiffs prove that they had standing to foreclosure at the time a foreclosure complaint is filed, there still remain numerous case law deficiencies needing fundamental reconsideration and reform.

On today’s show, John and I will review what we believe will be the start of eleven new developments in foreclosure defense in 2019 that American homeowners should anticipate taking full advantage of now.

Among those areas we will discuss on today’s show are new developments anticipated in the following important areas of foreclosure defense:

1. Expansions in Truth-in-Lending Act rescissions.

2. Reductions in Consumer-Related Federal Preemptions.

3. Widespread Exposure of the Washington Mutual, FDIC, and Chase Mortgage Fraud Which Will Have an Enormous Impact on Securitized Trust Foreclosure Litigation.

10. Beginnings of New State Legislation and Private Initiatives Redesigning State Foreclosure Systems.

11. Application of State and Federal Securities Laws to Foreclosure Litigation.

Please join us this Sunday on The Foreclosure Hour in order to get a head start and be fully prepared for battling foreclosures in 2019, which advance insight could make a difference in your individual foreclosure case.

Presiding Justice Delort and Justice Harris concurred in the judgment and opinion.

OPINION

Justice CUNNINGHAM delivered the judgment of the court, with opinion.

¶ 1 The plaintiff-appellant, Hanmi Bank (the Bank), appeals from the judgment of the circuit court of Cook County which dismissed its legal malpractice complaint against the defendants-appellees, Chuhak & Tecson, P.C., Michael Gilmartin, and Cary Fleisher (collectively, the defendants). The court ruled that the action was barred by the statute of limitations and that the Bank could not assert equitable estoppel to overcome the statute of limitations. For the following reasons, we reverse the judgment of the circuit court of Cook County and remand the case for further proceedings.

¶ 2 BACKGROUND

¶ 3 This legal malpractice lawsuit arises from several mortgage foreclosure actions related to loans that the Bank[1] made in 2005 to various borrowers (the borrowers) secured by mortgages on properties in Illinois and Wisconsin.

¶ 4 The Illinois Lawsuits

¶ 5 In 2009, while represented by other counsel prior to retaining the defendants (predecessor counsel), the Bank filed several foreclosure actions against the borrowers alleging that the loans were in default (the 2009 Illinois lawsuits). Six of these lawsuits were filed in the circuit court of Cook County, and one lawsuit was filed in the United States District Court for the Northern District of Illinois. By July 2011, the 2009 Illinois lawsuits had all been voluntarily dismissed without prejudice.

¶ 6 On July 17, 2011, while still represented by predecessor counsel, the Bank filed a 29 count complaint in the United States District Court for the Northern District of Illinois against the borrowers, again alleging that the loans were in default (the 2011 Illinois lawsuit). The Bank then hired the defendants as its new counsel, and the defendants replaced predecessor counsel in representing the Bank in the 2011 Illinois lawsuit.

¶ 7 On January 9, 2012, the Bank, while represented by the defendants, voluntarily dismissed the 2011 Illinois lawsuit. The defendants were aware that the 2009 Illinois lawsuits had previously been dismissed and therefore the dismissal of the 2011 Illinois lawsuit would be the second voluntary dismissal of the Bank’s foreclosure claims against the borrowers.

¶ 8 The Counter claim

¶ 9 Meanwhile, the borrowers filed a declaratory judgment action against the Bank in the circuit court of Cook County seeking to bar any anticipated new actions to foreclose on the properties. On July 17, 2011, the Bank filed a 29 count counterclaim against the borrowers, alleging, inter alia, breach of notes and guaranties (the counterclaim). Following the voluntary dismissal of the 2011 Illinois lawsuit, the borrowers filed a motion to dismiss the Bank’s counterclaim pursuant to section 13-217 of the Code of Civil Procedure (Code). 735 ILCS 5/13-217 (West 2012) (providing that plaintiffs are granted only a one-time right to refile a claim within one year of a voluntary dismissal). On June 5, 2013, the trial court granted the borrowers’ motion and dismissed the Bank’s counterclaim. In its order, the trial court explained that the Bank had already refiled its foreclosure claims when it filed the 2011 Illinois lawsuit and that section 13-217 of the Code barred the Bank from refiling the same claims a third time in the counterclaim. See Health Cost Controls v. Sevilla, 307 Ill. App. 3d 582, 589 (1999) (“[a] counterclaim is an independent cause of action, separate from a complaint, and it must stand or fall on its own merits”). On March 21, 2015, the trial court denied the Bank’s motion for reconsideration.

¶ 10 The defendants advised the Bank that the trial court’s ruling was “illogical” and “unsupported by any case in Illinois” and assured the Bank that the ruling would be reversed on appeal. Upon the advice of the defendants and with the defendants as its counsel, the Bank appealed the trial court’s order dismissing the counterclaim. On December 5, 2016, this court affirmed the trial court’s dismissal of the Bank’s counterclaim, holding that it was essentially the third filing of the foreclosure action and was therefore barred by the single-refiling rule. FourthStreet Villas, LLC v. United Central Bank, 2016 IL App (1st) 151194-U, ¶ 20.[2]According to the Bank, while the appeal of the counterclaim was pending, the defendants internally considered that the Bank may have a potential legal malpractice claim against them regarding the dismissal of the 2011 Illinois lawsuit. The defendants then notified their malpractice insurer about a possible malpractice lawsuit against them by the Bank.

¶ 11 The Wisconsin Lawsuit

¶ 12 On July 20, 2011, at the same time the Bank filed the 2011 Illinois lawsuit while represented by predecessor counsel, the Bank also filed a foreclosure action in the United States District Court for the Eastern District of Wisconsin (the Wisconsin lawsuit). The Wisconsin lawsuit sought to foreclose on the Wisconsin properties that were the subject of the 2009 Illinois lawsuits and 2011 Illinois lawsuit. On June 7, 2013, after the 2011 Illinois lawsuit had been voluntarily dismissed, the federal district court in Wisconsin entered summary judgment against the Bank in the Wisconsin lawsuit. In its order, the federal district court noted that Illinois law applied and that the Bank was precluded from asserting its foreclosure claims because of res judicata and the single-refiling rule under section 13-217 of the Code. On October 17, 2013, the federal district court then denied the Bank’s motion for reconsideration.

¶ 13 Following the denial of the motion for reconsideration, the defendants advised the Bank that the district court’s ruling was “illogical” and had “misconstrued Illinois law.”[3] According to the Bank, the defendants “falsely claimed that the Circuit Court of Cook County had so far ruled differently” and “further advised [the Bank] that there was a specific statute existing in Illinois that provides [sic] when a complaint is filed, the defendant parties have an absolute right to refile a counterclaim even if barred by a statute of limitations.” The defendants thus assured the Bank that the federal district court’s order in the Wisconsin lawsuit would be reversed on appeal. The Bank accordingly appealed the order through the defendants, as its counsel. On August 28, 2015, the Seventh Circuit Court of Appeals affirmed the federal district court’s dismissal of the Wisconsin lawsuit. United Central Bank v. KMWC 845, LLC, 800 F.3d 307 (7th Cir. 2015).

¶ 14 The Instant Legal Malpractice Action

¶ 15 On March 8, 2017, the Bank filed the instant action against the defendants in the circuit court of Cook County alleging legal malpractice. The three-count complaint included allegations that the defendants committed professional negligence by voluntarily dismissing the 2011 Illinois lawsuit. The complaint alleged that because of this negligence, the Bank was unable to successfully foreclose on any of the properties in the Illinois and Wisconsin lawsuits. The complaint further alleged that the defendants breached their fiduciary duty by making misrepresentations to the Bank that sought to conceal the defendants’ potential liability for legal malpractice.

¶ 16 The defendants moved to dismiss the Bank’s complaint pursuant to section 2-619(a)(5) of the Code (735 ILCS 5/2-619(a)(5) (West 2012)), arguing that the Bank’s claims were time-barred by the statute of limitations under section 13-214.3(b) of the Code. 735 ILCS 5/13-214.3(b) (West 2012) (an action for damages against an attorney arising out of an act or omission in the performance of professional services must be commenced within two years from the time the person bringing the action knew or reasonably should have known of the injury for which damages are sought). The defendants’ motion argued that the Bank knew or should have known about its injury when it received the two adverse decisions in June 2013 (the dismissal of the counterclaim lawsuit in the circuit court of Cook County and the dismissal of the Wisconsin lawsuit in the United States District Court for the Eastern District of Wisconsin) (the June 2013 adverse judgments). Therefore, the defendants argued that the Bank was time-barred from filing a legal malpractice claim against them after June 2015. The Bank responded that the defendants were equitably estopped from raising the defense of statute of limitations because they lulled the Bank into appealing the June 2013 adverse judgments and thus caused the Bank to wait to file its legal malpractice claim. The Bank argued that without the assurances of defendants, it would have questioned the defendants’ advice earlier and filed a legal malpractice action. Following a hearing, the circuit court of Cook County issued an order granting the defendants’ motion to dismiss the Bank’s legal malpractice action, and therefore dismissed the Bank’s cause of action against defendants with prejudice.

¶ 17 The Bank filed a motion for leave to file an amended complaint.[4] The motion attached a proposed amended complaint, repleading its same allegations of legal malpractice, as well as pleading that the defendants were estopped from raising the statute of limitations as a defense because they lulled the Bank into waiting to file its legal malpractice complaint. Following another hearing, the court determined the issue to be; “when did [the Bank] know or should have known the cause of injury.” The court further stated:

“Defendants correctly point out that [the Bank] had actual knowledge that [the Bank’s] lawsuits had been dismissed due to defendants’ conduct in previously dismissing the same action. Two separate judges in two separate forums gave the exact same reason as to the cause of the dismissal. [The Bank], a sophisticated banker, cannot claim that these decisions did not put it on notice of the injury and cause. * * * In this case, there is no dispute that when the Seventh Circuit issued its decision on the Wisconsin claim on August 28, 2015, [the Bank] was advised of the injury and the cause of the injury. [Citation.] Nothing more was needed to put the plaintiff on notice that the defendants’ January 9, 2012 dismissal [of the 2011 Illinois lawsuit] was the cause of injury. Therefore, even if [the Bank was] lulled into believing that [it] would win on appeal, the Seventh Circuit decision was the wake up call. It is unexplainable and unreasonable as to why [the Bank] did not file this action until eighteen months later. In order to benefit under the doctrine of equitable estoppel, the plaintiff must demonstrate diligence once it becomes clear that the defendant’s conduct was the cause of any injury. [Citation.]”

The court then denied the Bank’s motion to amend its complaint and concluded that “it is apparent that even after the proposed amendment the cause of action is still barred by the statute of limitations.” This appeal followed.

¶ 18 ANALYSIS

¶ 19 We note that we have jurisdiction to review this matter as the Bank filed a timely notice of appeal following the trial court’s denial of its motion for leave to file an amended complaint. Ill. S. Ct. R. 301 (eff. Feb. 1, 1994); R. 303 (eff. July 1, 2017).

¶ 20 The Bank presents a single issue on appeal: whether the trial court erred in dismissing its complaint after finding that the defendants were not equitably estopped from asserting a statute of limitations defense. Although in its notice of appeal the Bank stated that it is also appealing the trial court’s denial of its motion for leave to file an amended complaint, the Bank did not raise that issue until the very end of its reply brief. Normally, under those circumstances, the Bank would have forfeited its challenge to the trial court’s denial of its motion for leave to file an amended complaint. See Ill. S. Ct. R. 341(h)(7) (eff. May 25, 2018) (“[p]oints not argued [in appellant’s opening brief] are forfeited and shall not be raised in the reply brief, in oral argument, or on petition for rehearing”). Nevertheless, forfeiture is a limitation on the parties, not the court, and we may exercise our discretion to review an otherwise forfeited issue. Great American Insurance Co. of New York v. Heneghan Wrecking & Excavating Co., 2015 IL App (1st) 133376, ¶ 81 (Gordon, J., specially concurring). Accordingly, in the interest of justice, we exercise our discretion to consider the trial court’s denial of the Bank’s motion for leave to file an amended complaint and address that issue first as it is integrally related to the other issue and central to resolution of this case.

¶ 22 We confine our analysis to the first factor, as it is the only one in dispute. The Bank’s original complaint was defective because it alleged a legal malpractice claim outside of the statute of limitations. However, the Bank sought to cure that defect by seeking leave to file an amended complaint that would bar the defendants from using the statute of limitations as an affirmative defense. The trial court evidently believed that there was no basis on which to bar the defendants from asserting the statute of limitations defense to the complaint.

¶ 23 The Bank disagreed and asserted that the principle of equitable estoppel should be applied to bar the defendants from asserting the statute of limitations defense. Further, the Bank points out that the proposed amended complaint adequately pleaded the elements of equitable estoppel to bar the defendants from raising the statute of limitations defense. In order to establish equitable estoppel, the party claiming estoppel must demonstrate that (1) the other party misrepresented or concealed material facts, (2) the other party knew at the time the representations were made that the representations were untrue, (3) the party claiming estoppel did not know that the representations were untrue when they were made and when they were acted upon, (4) the other party intended or reasonably expected the representations to be acted upon by the party claiming estoppel or by the public generally, (5) the party claiming estoppel reasonably relied upon the representations in good faith to his or her detriment, and (6) the party claiming estoppel has been prejudiced by his or her reliance on the representations. In re Parentage of Scarlett Z.-D., 2015 IL 117904, ¶ 25.

¶ 24 The Bank’s proposed amended complaint pleaded these elements with the facts as previously described. Specifically, the Bank asserted (1) that the defendants misrepresented the law regarding the single-refiling rule while concealing from the Bank that it may have a malpractice claim against them; (2) that the defendants knew they had erred regarding the dismissal of the 2011 Illinois lawsuit and that prompted them to notify their liability insurer about a possible malpractice lawsuit; (3) that the Bank trusted the defendants’ assurances and appealed the June 2013 adverse judgments based on that advice; (4) that the defendants never informed the Bank of their own doubts about the appeals and never advised it to seek a second opinion or new counsel; (5) that the Bank, based upon the defendants’ assurances, did appeal the June 2013 adverse judgments in good faith; and (6) that the Bank ultimately relied upon the defendants’ assurances to its own detriment because the appeals process caused the statute of limitations on the Bank’s malpractice claim to expire.

¶ 26 The defendants argue that the Bank did not adequately plead equitable estoppel because it did not allege the first factor: that the defendants made a material misrepresentation or concealed a material fact. However, both the Bank’s original complaint and its amended complaint pleaded that the defendants assured the Bank that the June 2013 adverse decisions were “illogical” and would be reversed. The Bank points out that these assurances were made by the defendants while they simultaneously notified their liability insurer about a possible malpractice lawsuit. The alleged fact that the defendants notified their liability insurer is a material fact. It goes to the crux of this case and suggests that the defendants knew they had committed an error. Yet, they concealed that fact from the Bank and continued to encourage the Bank to pursue a course of action which they knew was untrue and misrepresented the law.

¶ 27 The defendants do not deny that they notified their liability insurer about a possible malpractice claim stemming from the dismissal of the 2011 Illinois lawsuit. They do not even deny that they lulled the Bank into a false sense of security with respect to the propriety of the legal advice that they gave the Bank regarding the pursuit of an appeal. Instead, the defendants argue that the Bank should have rejected their legal advice when the Seventh Circuit Court of Appeals affirmed the dismissal of the Wisconsin lawsuit against the Bank.[5] During oral argument before this court, counsel for the defendants suggested that in order to avoid the statute of limitations issue, the Bank could and should have pursued its malpractice action against the defendants while still being represented by them. This defies the reality of legal representation and common behavior between trusted lawyers and their clients.

¶ 28 Allowing the Bank to file its amended complaint would not only be equitable, but it would also not prejudice the defendants in any way. See Savage v. Mui Pho,312 Ill. App. 3d 553, 557 (2000) (“[t]he most important consideration is whether the allowance of the amendment furthers the ends of justice”); Vision Point of Sale, Inc. v. Haas, 226 Ill. 2d 334, 352 (2007) (“there is a broad overall policy goal of resolving cases on the merits rather than on technicalities”). It is clear by comparing the Bank’s original complaint, which did not plead equitable estoppel, to its proposed amended complaint, which quite clearly pleaded all the elements of equitable estoppel, that the defects in the original complaint were cured.[6] See Loyola Academy v. S & S Roof Maintenance, Inc., 146 Ill. 2d 263, 274-75 (1992)(if, after comparing the two complaints, the defects have clearly been cured, the amended complaint should be allowed). Accordingly, the trial court abused its discretion by denying the Bank leave to file its proposed amended complaint. We reverse the trial court’s judgment and remand the case to the circuit court of Cook County so that the Bank can file its proposed amended complaint. The issue of whether the original complaint was dismissed in error is therefore moot and we need not address it.

¶ 29 CONCLUSION

¶ 30 For the foregoing reasons, we reverse the judgment of the circuit court of Cook County and remand the matter for further proceedings consistent with this opinion. On remand, the Bank is allowed to file its proposed amended complaint.

¶ 31 Reversed and remanded.

[1] The 2005 loans were made by the Mutual Bank of Harvey. On July 21, 2009, federal regulators closed the Mutual Bank of Harvey. United Central Bank then entered into a purchase and assumption agreement, securing assignment of the Mutual Bank of Harvey’s mortgages, notes, and guarantees. In 2015, United Central Bank merged into Hanmi Bank.

[2] Our supreme court recently reaffirmed the single-refiling rule and held that a plaintiff cannot file a substantially similar foreclosure action a third time merely by labeling the new cause of action as a breach of a promissory note when the substance of that action is identical to the prior foreclosure actions, i.e., based on the same default of the same note. First Midwest Bank v. Cobo, 2018 IL 123038, ¶ 42.

[3] This was during the same time period that the defendants were also advising the Bank that the trial court’s ruling on the counterclaim was “illogical” and would be reversed on appeal.

[4] In their briefs, both parties claim that this motion was also a motion to reconsider or a motion to vacate judgment. The document in the record, however, states that it is only a motion for leave to file an amended complaint. Yet, based on the record, the trial court seemed to treat the motion as also a motion to reconsider and fully explained its reasoning for its original judgment.

[5] We note that this argument is flawed, as well as the trial court’s comment that the Seventh Circuit’s decision was the “wake up call” for the Bank, because by the time the Seventh Circuit’s decision in the Wisconsin lawsuit was issued, in August 2015, the statute of limitations had already expired.

[6] It is arguable that the original complaint did adequately plead equitable estoppel by alleging that the defendants lulled the Bank into appealing the June 2013 adverse decisions.

Foreclosures can be extremely painful events. Imagine finding out years later that it was all a big mistake.

That’s exactly what happened to Jeff and Eva Reiner. The couple turned to Wells Fargo (WFC), their mortgage servicer, for help making their payments after Eva, the family’s breadwinner, was laid off by Verizon (VZ) in 2010.

“We were desperate. I begged them for help,” Eva Reiner told CNN Business.

But Wells Fargo did not accept their requests for a mortgage modification for their beloved six-acre property in rural South Carolina. Wells Fargo eventually foreclosed on the home, forcing the couple to move their teenage son, give up three dogs and forfeit the equity they had built up in the house.

“As we have done in past years, we are suspending evictions from Freddie Mac-owned homes to help provide families with a greater measure of certainty during the upcoming holiday season,” said Yvette Gilmore, Freddie Mac’s Vice President of Single-Family Servicer Performance Management.

The holiday suspension will apply to eviction lockouts on Freddie Mac real estate owned homes but will not affect other pre- or post-foreclosure activities. Companies managing local evictions for Freddie Mac may continue to file documentation as needed during the suspension period.

The company also confirmed its mortgage relief options in disaster areas impacted by the California wildfires. Borrowers who may be experiencing financial challenges or disaster hardships are strongly encouraged to contact their mortgage servicer to explore one of the Freddie Mac workout options.

Freddie Mac has helped more than 1.3 million financially troubled borrowers avoid foreclosure since 2009. For more information on Freddie Mac mortgage relief, visit My Home by Freddie Mac(SM).

About Freddie MacFreddie Mac makes home possible for millions of families and individuals by providing mortgage capital to lenders. Since our creation by Congress in 1970, we’ve made housing more accessible and affordable for homebuyers and renters in communities nationwide. We are building a better housing finance system for homebuyers, renters, lenders, investors and taxpayers. Learn more at FreddieMac.com, Twitter @FreddieMac and Freddie Mac’s blog FreddieMac.com/blog.

Alicia Jones

202-752-5716

WASHINGTON, DC – Fannie Mae (FNMA/OTCQB) announced today that it will suspend eviction lockouts of foreclosed single-family properties during the holiday season. The suspension of eviction lockouts will apply to single-family and 2-4 unit properties from December 17, 2018 through January 2, 2019. During this period, legal and administrative proceedings for evictions may continue, but families will be allowed to remain in the home. Servicers should continue to follow Fannie Mae’s guidelines for single-family mortgages related to homes and borrowers in disaster-affected areas.

“We believe it is important to extend the timeline of help for struggling borrowers during the holidays,” said Jacob Williamson, Vice President of Single-Family Real Estate at Fannie Mae. “We encourage homeowners who may be struggling with their mortgage or facing possible foreclosure to reach out to Fannie Mae or your servicer to get help. We want to help pursue those options whenever possible.”

Homeowners can visit www.knowyouroptions.com for resources on how to prevent foreclosure, including how to find out if Fannie Mae owns their loan. Homeowners also can contact Fannie Mae at 1-800-232-6643 for more information.

Fannie Mae helps make the 30-year fixed-rate mortgage and affordable rental housing possible for millions of Americans. We partner with lenders to create housing opportunities for families across the country. We are driving positive changes in housing finance to make the home buying process easier, while reducing costs and risk. To learn more, visit fanniemae.com and follow us on twitter.com/FannieMae.

This is an appeal from a final judgment of foreclosure. We are required to reverse because, as has become far too common in residential foreclosure cases, the plaintiff that took the case to trial—Wilmington Savings Fund Society, FSB, which was neither the original lender nor the original plaintiff—failed to present legally sufficient evidence that it had standing under section 673.3011, Florida Statutes (2016), to enforce the promissory note upon which this foreclosure action is based.[1]

The already expansive body of foreclosure law in Florida will not benefit from another long opinion that details a foreclosure plaintiff’s failure of proof when standing has been placed at issue or that repeats the settled legal principles governing that question. That is, and was when this case was tried, well-trodden ground. The bottom line in the present appeal is this: Although it proceeded to trial on the theory that it was the holder of the note, Wilmington’s trial evidence failed to show that the entity identified as the original lender on the note (America’s Wholesale Lender) ever negotiated, assigned, or otherwise transferred the note to anyone and, even if did, that the entity that supposedly assigned the note to Wilmington (Ditech Financial, LLC, as successor-by-merger to Green Tree Servicing, LLC) ever actually owned the note or otherwise had the right to assign or transfer it. See, e.g., Olivera v. Bank of Am., N.A., 141 So. 3d 770, 773 (Fla. 2d DCA 2014) (reversing summary judgment on standing grounds where “[n]othing in the record reflect[ed] a chain of transfer of interest . . . from the original lender”); Segall v. Wachovia Bank, N.A., 192 So. 3d 1241, 1246 (Fla. 4th DCA 2016)(reversing final judgment of foreclosure based on lack of standing where “Wachovia failed to sufficiently prove that Chase Home merged with Chase Bank[] and that Chase Bank thus acquired the note”). At oral argument, Wilmington all but conceded the absence of evidence on the latter point.

Because Wilmington’s failure of proof on standing is dispositive, we do not reach the other issues raised by the appellants. We reverse and remand with directions that the trial court enter an order of involuntary dismissal, which is the relief the appellants properly sought in the trial court. See, e.g., Partridge v. Nationstar Mortg., LLC, 224 So. 3d 839, 842 (Fla. 2d DCA 2017).

Reversed and remanded with directions.

KHOUZAM and BLACK, JJ., Concur.

NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION AND, IF FILED, DETERMINED.

[1] Green Tree Servicing, LLC—a prior named plaintiff in the circuit court proceedings—is the listed appellee in the style of this case. Prior to the entry of the final judgment in the trial court, however, Wilmington was substituted as the plaintiff and is the party ultimately required to establish standing for the purposes of this foreclosure.

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Sunday – December 9, 2018

Paragraph 22, The Notice of Default and Right To Cure: How To Use This Most Overlooked Foreclosure Defense To Defeat Summary Judgment and Win at Trial (Foreclosure Workshop #16: Rebroadcast from July 17, 2016)

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This important broadcast, first exclusively airing on The Foreclosure Hour on July 17, 2016, is being repeated because homeowners are still largely under-using this powerful weapon against foreclosure, given the sloppiness and dishonesty of loan servicers, although it is available in virtually every mortgage and deed of trust situation.

John Waihee and I are pleased to have heard from many of our listeners that since that first broadcast they have used this defense successfully and easily to defeat summary judgments, even when appearing pro se, but too many homeowners and even their counsel are still inexcusably overlooking this powerful defense.

Not only will its knowledgeable use almost always defeat a foreclosure summary judgment no matter in what jurisdiction a borrower resides, but it can also result in a foreclosure action being dismissed entirely and with prejudice, or result in an extremely attractive settlement once your pretender lender and its loan servicer and their attorneys for a change have their backs embarrassingly up against an evidentiary wall.

All a borrower facing foreclosure needs to know about this “bunker buster” foreclosure defense mega-weapon is contained within this one hour rebroadcast. You cannot afford to miss a minute of it.

This is, moreover, just another glaring example of how vulnerable foreclosure rules really are in court once one understands both how to use evidentiary objections correctly and why most judges, far from being stupid or corrupt, have nevertheless become brainwashed into mistakenly believing blindly that borrowers facing foreclosure are just deadbeats who have not paid their mortgages and whose arguments are not worthy of evidentiary review.

You will also gain valuable insight from this rebroadcast into how judges historically have become misled by the legal system’s defective rule reasoning, what we have termed “The Rule Ritual,” mistaking “Rule Statements” for “Rules,” without digging into the purposes behind the rule statements, which homeowners with an increased understanding can, turning the tables on lenders as it were, use to their winning benefit.

Please join John Waihee and me for the rebroadcast of our Foreclosure Workshop #16, and you will quickly gain this uniquely specialized knowledge, as many of our listeners already successfully have, about Paragraph 22, that could well save your home from foreclosure and your family from eviction.

This affirmative defense is contractual, in that it is a condition precedent to a lender’s ability to foreclosure, written into the language of standard mortgages and deeds of trust, and even were it absent in your loan documentation, courts have considered it to be contractually required under the common law, Santiago v. Tanaka, 137 Haw. 137, 157, 366 P.3d 612 (2015).

The panel held that under Jesinoski v. Countrywide Home Loans, 135 S. Ct. 790, 792 (2015), borrowers may affect rescission of such a loan simply by notifying the creditor of their intent to rescind within the three-year period from the loan’s consummation date. The panel further held that because TILA did not include a statute of limitations outlining when an action to enforce such a rescission must be brought, courts must borrow the most analogous state law statute of limitations and apply that limitation period to TILA rescission enforcement claims. The panel held that in Washington, the state’s six-year contractstatute of limitations was the most analogous statute. The panel rejected the district court’s application of TILA’s one-year statute of limitations for legal damages claims. The panel also rejected the bank’s argument that Washington’s two-year catch-all statute of limitations should apply. Because the borrower brought this action within six years, the district court erred in dismissing the TILA claim as time barred.

Wells Fargo blamed a computer glitch for the second time this year that resulted in the bank mistakenly foreclosing on hundreds of homes over an eight-year period, CBS News reported. The software error applied to loan modification applications submitted between March 15, 2010, and April 30, 2018, according to Wells Fargo.

In November, Wells Fargo admitted the error in a filing with the United States Securities and Exchange Commission, noting that a computer glitch led the bank to deny its mortgage customers the request for a loan modification or repayment plan in 870 instances. Eventually, 545 homes were foreclosed because of Wells Fargo’s error.

Jose Aguilar, who owned one of the foreclosed homes, told his story in a CBS News interview. To compensate Aguilar for its mistake, Wells Fargo sent him an apology letter as well as a check in the amount of $25,000, but Aguilar still wants an explanation, and his lawyer stated that the amount “doesn’t even begin to cover his total losses.”